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The Vehicle Recovery/Roadside Assistance Market - UK - September 2012

  • What's next in the development of sales channels?
  • How can the sector benefit from technology?

About the Roadside Assistance Market

The market for vehicle recovery services is at a mature stage in its development with recent years seeing stagnation in the number of consumers with membership of recovery services. Such a trend, coupled with the impact of the recent economic slowdown, has also had a negative impact on revenues which for 2012 are expected to be 5% down on 2007 levels.

Nevertheless holding some sort of vehicle recovery insurance remains important to many drivers with Mintel estimating that some 29 million have some form of vehicle recovery insurance in 2012. Although cover can be offered free of charge as part of bundling with the likes of financial products, many drivers still buy cover directly. Research has found that in such instances having the peace of mind that breakdown cover brings is by far the most important factor for holding this type of insurance.

Yet the market is evolving with the difficult conditions of late stimulating competition between companies as well as encouraging innovation. While tactically price is an important factor for all players in the market, many companies have strengths with particular customer groups that they seek to exploit. The AA is currently the most successful of these with its established position in the market, range of services, innovations and promotional support ensuring that it currently has around half of the market. Its two main rivals, the RAC and Green Flag, complete a trio of providers that together have over 90% of the market.

Reducing costs and increasing the effectiveness of market presence are important for all of those in the market. The internet is currently playing a major role in achieving both aims with Mintel’s research showing that 24% of customers recently purchased direct from company websites. Promotional expenditure is up on recent years with the increased use of direct mail and the emergence of online advertising helping to better target members and new customers.

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: The vehicle recovery market, by value, 2007-17
              • Figure 2: The vehicle recovery market, by volume, 2007-17
            • Market factors
              • Companies, brands and innovation
                • Figure 3: Company share of the vehicle recovery market, by members, 2012
              • The consumer
                • Figure 4: Reasons for not having breakdown cover (top 6 responses), 2012
                • Figure 5: How breakdown cover was acquired, June 2012
                • Figure 6: Attitudes towards breakdown recovery services, June 2012
              • What we think
              • Issues in the Market

                  • Can membership be increased?
                    • Are there opportunities to raise revenues?
                      • How does the market compete with a dominant AA?
                        • What next in the development of sales channels?
                          • How can the sector benefit from technology?
                          • Trend Application

                              • Green Influencers
                                • Extend My Brand
                                  • Trend 2012 Access Anything, Anywhere
                                  • Internal Market Environment

                                    • Key points
                                      • Car sales showing signs of recovery
                                        • Figure 7: New and used car registrations, 2007-12
                                      • Sales depressed during the recent recession
                                        • Used vehicles represent a much stronger market
                                          • Rise in multiple car ownership continues
                                            • Figure 8: Number of cars owned by individual households, 1992/94-2010
                                          • Costs of running a car continue to rise
                                            • Figure 9: Consumer expenditure on car purchasing, servicing and repair and motoring expenses, seasonally adjusted at current prices, 2008-11
                                          • Does more older drivers mean more help is needed on the road?
                                            • Figure 10: Number of licence holders, by age, 1975/76-2010
                                          • Battery and tyre problems dominate call-out requests
                                            • Figure 11: Top ten most common breakdown call-outs in 2011 (AA roadside patrols only)
                                        • Broader Market Environment

                                          • Key points
                                            • UK economy fails to see any immediate recovery
                                              • Figure 12: GDP, PDI, consumer expenditure and savings, at constant 2007 prices, 2007-17
                                              • Figure 13: GDP quarterly percentage change, Q1 2004-Q1 2012
                                            • Rising affluence isn’t the whole story
                                              • Figure 14: Forecast adult population trends, by socio-economic group, 2007-17
                                            • The number of older adults is set to increase...
                                              • Figure 15: Trends in the age structure of the UK population, 2007-17
                                            • ...with retired adults witnessing a sizeable expansion in their numbers
                                              • Figure 16: Forecast adult population trends, by lifestage, 2007-17
                                            • Smaller households increasing in importance
                                              • Figure 17: Number of households and persons per household, 2007-17
                                            • Internet expansion continues
                                              • Figure 18: Broadband penetration, 2006-11
                                          • Who’s Innovating?

                                            • Key points
                                              • New ways of reaching out to customers
                                                • Technology remains in vogue
                                                  • Ultimate market segmentation – breakdown recovery for campers?
                                                    • Eco-friendly car recovery
                                                      • Free breakdown cover for used cars
                                                      • Competitive Context

                                                        • Key points
                                                          • Personal transport expenditure spiralling upward
                                                            • Figure 19: Spending on personal transport, at current prices, 2001 and 2011
                                                          • Operating cost increases outstrip vehicle purchase costs
                                                            • Figure 20: Annual percentage change in transport costs, 2000-09
                                                          • Used car prices fall back
                                                            • Figure 21: Price indices of new and used cars, 2000-09
                                                          • Price of fuel reaching a new high
                                                            • Figure 22: Escalation of price of motor fuel in recent years, pence per litre, January 2010-May 2012
                                                          • Car mileage is in decline
                                                            • Figure 23: Road traffic (billion vehicle miles) in Great Britain, by vehicle type, 1980-2010
                                                        • Strengths and Weaknesses

                                                          • Strengths
                                                            • Weaknesses
                                                            • Market Size and Forecast

                                                              • Key points
                                                                • Few signs of recovery for the market
                                                                  • Figure 24: UK vehicle recovery market, by value, at current and constant prices, 2007-17
                                                                • Market remains depressed after falling back in 2008
                                                                  • Recession and competition hit the sector
                                                                    • The future
                                                                      • Forecast
                                                                        • Figure 25: Best- and worst-case forecasts of vehicle recovery market, by value, 2007-17
                                                                        • Figure 26: Best- and worst-case forecasts of vehicle recovery market, by volume, 2007-17
                                                                    • Segment Performance

                                                                      • Key points
                                                                        • Organisation membership dominates the market...
                                                                          • Figure 27: Segmentation of the vehicle recovery market, by value, at current prices, 2007-12
                                                                        • ...although sales are down 8% on 2007
                                                                          • Ad hoc membership performs somewhat better
                                                                            • Price competition rife
                                                                            • Market Share

                                                                              • Key points
                                                                                • Economic frailty restrains membership development
                                                                                  • Figure 28: Company shares of the vehicle recovery market, by UK membership*, 2006-12
                                                                                • Green Flag suffers the most of the big three
                                                                                  • Smaller companies fail to make impact
                                                                                    • Price isn’t everything when choosing a recovery insurance
                                                                                      • Figure 29: Prices of breakdown recovery products for the AA, RAC and Green Flag, July 2012
                                                                                  • Companies and Products

                                                                                    • The AA (Automobile Association)
                                                                                        • Figure 30: Key financials for the Automobile Association Ltd, 2010 and 2011
                                                                                      • RAC
                                                                                          • Figure 31: Key financials for RAC Ltd, 2010 and 2011
                                                                                        • Green Flag
                                                                                            • Figure 32: Key financials for Green Flag Ltd, 2010 and 2011
                                                                                          • Other companies
                                                                                            • Britannia Rescue
                                                                                              • Mondial Assistance
                                                                                                • Rescuemycar.com
                                                                                                  • Autonational Rescue
                                                                                                    • GEM Motoring Assist
                                                                                                      • First Call GB Ltd
                                                                                                        • Breakdown Direct
                                                                                                          • Europ Assistance
                                                                                                            • AXA Assistance
                                                                                                              • Retailer-branded breakdown cover
                                                                                                                • Car manufacturer-branded breakdown cover
                                                                                                                  • Figure 33: Car manufacturer-branded breakdown cover on new car purchases, 2012
                                                                                                                • Roadside assistance and breakdown cover from banks
                                                                                                                  • Figure 34: Banks’ with-benefits current accounts that offer roadside and breakdown cover, 2012
                                                                                                              • Brand Communication and Promotion

                                                                                                                • Key points
                                                                                                                  • Advertising expenditure stagnates
                                                                                                                    • Figure 35: UK main media advertising expenditure on vehicle breakdown and recovery services, 2008-12
                                                                                                                  • Direct mail remains the most popular form of promotion
                                                                                                                    • Figure 36: Main media advertising expenditure on vehicle breakdown and recovery services, % share by media type, 2008-12
                                                                                                                  • The AA tops adspend
                                                                                                                    • Figure 37: Main media advertising expenditure on vehicle breakdown and recovery services, by advertiser, 2008-12
                                                                                                                • Channels to Market

                                                                                                                  • Key points
                                                                                                                    • Not all drivers go direct to purchase recovery insurance
                                                                                                                      • Figure 38: Key channel groups used to acquire breakdown cover, June 2012
                                                                                                                    • Comparethemarket.com leads comparison site market
                                                                                                                      • Figure 39: Choice of financial information sites, March 2012
                                                                                                                    • Is interest in the use of comparison sites waning?
                                                                                                                      • Figure 40: Use of financial information sites, April 2011 and March 2012
                                                                                                                  • The Consumer – Vehicle Ownership

                                                                                                                    • Key points
                                                                                                                      • Cars dominate vehicle ownership
                                                                                                                          • Figure 41: Type of vehicle owned, June 2012
                                                                                                                        • Males, older adults and higher income earners most likely to purchase a new car
                                                                                                                          • Used vehicles popular with all drivers
                                                                                                                          • The Consumer – Presence of Recovery Organisations

                                                                                                                            • Key points
                                                                                                                              • The AA has greatest penetration in the breakdown recovery market
                                                                                                                                  • Figure 42: Ownership of vehicle breakdown cover, by recovery organisation, June 2012
                                                                                                                                • AA is well positioned with young and affluent drivers
                                                                                                                                  • Green Flag and smaller providers appeal to older and the less wealthy
                                                                                                                                    • Churn most likely to be seen amongst the middle-aged and those struggling financially
                                                                                                                                      • The AA looks to be growing its presence in the market
                                                                                                                                        • Figure 43: Ownership of breakdown cover, by recovery organisation, 2010-12
                                                                                                                                      • Individual companies record strengths in particular market sectors
                                                                                                                                        • Figure 44: Ownership of vehicle breakdown cover, by recovery organisation, June 2012
                                                                                                                                    • The Consumer – How Cover is Acquired

                                                                                                                                      • Key points
                                                                                                                                        • Cover can be acquired indirectly or directly from the insurance provider
                                                                                                                                            • Figure 45: How breakdown cover was acquired, June 2012
                                                                                                                                          • Young drivers acquiring cover differently
                                                                                                                                            • Income level affects channel decision
                                                                                                                                              • Use of the internet for purchasing is growing
                                                                                                                                                • Figure 46: How breakdown cover was acquired, 2010-12
                                                                                                                                              • Those buying from AA are more likely to buy direct
                                                                                                                                                • Figure 47: How breakdown cover was acquired, by ownership of vehicle breakdown cover, by recovery organisation, June 2012
                                                                                                                                              • Roadside assistance is a popular financial benefit
                                                                                                                                                • Figure 48: Ownership and use of benefits – fee-charging packaged account customers only, April 2012
                                                                                                                                              • Assistance appeals more to men and those on high incomes
                                                                                                                                              • The Consumer – Why Cover Is Not Held

                                                                                                                                                • Key points
                                                                                                                                                  • Price is the major barrier in not holding breakdown recovery insurance
                                                                                                                                                      • Figure 49: Reasons for not having breakdown cover, June 2012
                                                                                                                                                  • The Consumer – Attitudes Towards Breakdown Recovery Services

                                                                                                                                                    • Key points
                                                                                                                                                      • Peace of mind and lack of loyalty dominate consumer thinking
                                                                                                                                                          • Figure 50: Attitudes towards breakdown recovery services, June 2012
                                                                                                                                                        • Peace of mind important to certain groups
                                                                                                                                                          • Young drivers face a dilemma
                                                                                                                                                            • Older drivers are flexible on who they are with
                                                                                                                                                              • Drivers of used vehicles have more practical demands
                                                                                                                                                                • Figure 51: Attitudes towards breakdown recovery services, by ownership of vehicle breakdown cover, June 2012
                                                                                                                                                              • It’s all in the name
                                                                                                                                                                • Figure 52: Attitudes towards breakdown recovery services, by ownership of vehicle breakdown cover, by recovery organisation, June 2012
                                                                                                                                                            • Appendix – Vehicle Ownership

                                                                                                                                                                • Figure 53: Ownership of vehicle breakdown cover, by demographics, June 2012
                                                                                                                                                            • Appendix – Presence of Recovery Organisations

                                                                                                                                                                • Figure 54: Most popular ownership of vehicle breakdown cover, by recovery organisation, by demographics, June 2012
                                                                                                                                                                • Figure 55: Next most popular ownership of vehicle breakdown cover, by recovery organisation, by demographics, June 2012
                                                                                                                                                            • Appendix – How Cover is Acquired

                                                                                                                                                                • Figure 56: How breakdown cover was acquired, by demographics, June 2012
                                                                                                                                                                • Figure 57: Ownership and use of benefits – fee-charging packaged account customers only, by age, April 2012
                                                                                                                                                                • Figure 58: Ownership and use of benefits – fee-charging packaged account customers only, by socio-economic group, April 2012
                                                                                                                                                                • Figure 59: Ownership and use of benefits – fee-charging packaged account customers only, by household income, April 2012
                                                                                                                                                            • Appendix – Attitudes Towards Breakdown Recovery Services

                                                                                                                                                                • Figure 60: Most popular attitudes towards breakdown recovery services, by demographics, June 2012
                                                                                                                                                                • Figure 61: Next most popular attitudes towards breakdown recovery services, by demographics, June 2012

                                                                                                                                                            Companies Covered

                                                                                                                                                            • Acromas Holdings
                                                                                                                                                            • Alfa Romeo
                                                                                                                                                            • Allianz Group
                                                                                                                                                            • Audi United Kingdom
                                                                                                                                                            • Automobile Association (AA)
                                                                                                                                                            • Aviva Plc
                                                                                                                                                            • AXA
                                                                                                                                                            • Bank of England
                                                                                                                                                            • Carlyle Group (The)
                                                                                                                                                            • Civil Service Motoring Association Ltd (CSMA)
                                                                                                                                                            • Clydesdale Bank
                                                                                                                                                            • CVC Capital Partners Limited
                                                                                                                                                            • Europ Assistance UK
                                                                                                                                                            • Facebook, Inc.
                                                                                                                                                            • Fiat Auto
                                                                                                                                                            • First Direct
                                                                                                                                                            • Google, Inc.
                                                                                                                                                            • Green Flag Motoring Assistance
                                                                                                                                                            • Grupo Santander UK
                                                                                                                                                            • Institute of Transport Management
                                                                                                                                                            • Jaguar Cars Limited
                                                                                                                                                            • Lloyds Banking Group
                                                                                                                                                            • Mazda Motor Corporation
                                                                                                                                                            • Mercedes-Benz UK
                                                                                                                                                            • Mitsubishi Motors Corporation
                                                                                                                                                            • Mondial Assistance (UK) Limited
                                                                                                                                                            • NatWest
                                                                                                                                                            • Nissan Motor (GB) Ltd
                                                                                                                                                            • RoadChef Motorways Limited
                                                                                                                                                            • Royal Automobile Club
                                                                                                                                                            • Skoda Auto a.s.
                                                                                                                                                            • Tesco Plc
                                                                                                                                                            • The Caravan Club
                                                                                                                                                            • The Hertz Corporation
                                                                                                                                                            • Volkswagen AG

                                                                                                                                                            The Vehicle Recovery/Roadside Assistance Market - UK - September 2012

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